The companies benefiting from our Valentine’s Day spending

Love is in the air! Valentine’s Day is here again – February 14th if you’re yet to buy a card – with its annual celebration of love and romance. We have been expressing affection to our partners with cards, flowers and gifts on this date for hundreds of years.

Retail sales are expected to increase across the globe in the run up to the big day as hopeless romantics splash out on cards, flowers and presents. Spending on others is expected to hit a record $14.2bn in the United States this year*. UK retailers are also hoping for a boost. Last February saw total retail sales increase 5.2% in February 2023**, even though inflation was running at 10%.

And to mark this year’s occasion, here are the businesses and investment funds that may benefit from the most amorous date on the calendar.

The big question is what will people buy? Will the slight easing in the cost of living enable them to be make more lavish gestures this year or will they stick to a bunch of roses?

Just the essentials

Valentine’s Day is potentially lucrative for leading supermarket chains which sell flowers, as well as a wide variety of love-themed gifts and meals for those looking to spend Valentine’s Day with a cozy night in. J Sainsbury and Tesco are two of the largest holdings in the Schroder Income fund***, which is managed by Andrew Evans and Kevin Murphy. This is a value driven portfolio that invests in companies valued at less than their true worth and waits for a correction. It has an emphasis on absolute return.

The other absolute essential you’ll need is a card. Approximately 145 million Valentine’s Day cards are exchanged each year, according to Hallmark****. Retailers such as WHSmith are among the most likely to cash in and this stock is a holding in the VT Tyndall Unconstrained UK Income fund^, which is managed by the experienced Simon Murphy. The fund takes a high conviction approach, with 30 to 40 best ideas that are biased towards the mid-cap area of the UK stock market.

Luxury gift options

Now we move on to gifts. A potential beneficiary will be Moët Hennessy Louis Vuitton, the luxury goods specialist that’s more commonly known as LVMH. It also happens to be among the 10 largest holdings in the Janus Henderson European Focus fund***, which aims to provide a return from capital growth and income over the long term. We like the fact that the team is structured in such a way that it can focus on the areas where it can add most value, and invest early enough in a company.

Technology giant Apple has also been pushing its products at Valentine’s Day gifts with marketing emails urging consumers to “Wear your heart on your wrist” with an Apple Watch! Apple is the largest individual stock holding in the AXA Framlington American Growth fund***, which looks for companies enjoying a competitive advantage over their rivals. Steve Kelly, the fund’s experienced manager, is backed by a well-resourced team and can benefit from exciting, less researched companies in the US market.

Romantic holiday for two

How about those loved-up couples celebrating the special day abroad? Jet2, the holiday firm, has recently been promoting romantic city breaks to Barcelona and Paris. The low-cost leisure airline is held by Abby Glennie in her abrdn UK Mid Cap Equity fund***, which aims to generate growth over the long term. Abby is an impressive manager who has delivered excellent performance and we believe this fund is a strong candidate for investors wanting UK mid-cap exposure.

Of course, somewhere to stay will be essential for those going abroad and a potential beneficiary is Marriott International, the hotel giant with nearly 8,700 properties across 139 countries^^. Nick Ford and Hugh Grieves have the company as one of the largest holdings in their Premier Miton US Opportunities fund***, which aims to provide long term capital growth. This is a highly differentiated US equity fund that has more of an emphasis on medium-sized companies than many of its peers.

For the last minute shoppers

However, it’s also important to remember that Valentine’s Day will slip the mind of well-intentioned partners across the world. After all, that’s why garages sell flowers and cards!

If you think there will be a mini stampede of people heading to their local forecourts late in the day on February 14th then companies like oil giant Shell may cash in. The Anglo-Dutch company, which operates more than 1,000 Shell branded service stations across the UK^^^, is a holding in Ben Whitmore’s Jupiter UK Special Situations fund***. This fund offers investors access to a well-diversified portfolio of predominantly larger companies and we believe it could be attractive to those looking for a value-driven strategy.

Any last minute shopper worth their salt knows the power of Amazon Prime next day shipping. Not to mention, Prime members can get same-day delivery on qualifying orders above £20 (in select areas) meaning you could really push your luck! Amazon is a top holding in the CT Global Focus fund***, which looks to invest in high quality, high return on capital businesses which can compound over the long term.

*Source: National Retail Federation, 29 February 2024
**Source: British Retail Consortium, 7 March 2023
***Source: fund factsheet, 31 December 2023
****Source: Hallmark
^Source: fund factsheet, 30 November 2023
^^Source: Marriott International, Corporate Information
^^^Source: Shell, What we do

Past performance is not a reliable guide to future returns. You may not get back the amount originally invested, and tax rules can change over time. The views expressed are those of the author and fund managers and do not constitute financial advice.

Published on 09/02/2024